Home Equity Line on a Rental / Investment

13 Replies

Hello All!!! In New York, I went to my Chase banker and they said it's impossible for them to give me a home equity line of credit on my free and clear condo investment apartment that I rent out. I guess this is true with their bank, but has anyone done this with another bank? Thanks!

Try your local credit union and/or TD Bank. I was recently approved by both on a HELOC investment property loan. Good luck!

Originally posted by @Sandra Holt :

Try your local credit union and/or TD Bank. I was recently approved by both on a HELOC investment property loan. Good luck!

 Digging up my old post! Thank You Sandra. I did exactly that on a tip from a bigger bank. They said "check out a credit union too". I got one at my local CU and it's for more money, with a much better rate, and no closing fees!!! I Did it on my home but I guess my next goal is to try it on an existing investment property. Or I can do a cash out???

@Kevin Dee , I'm so glad that it worked out for you!  As far as tying to get a loan on your next investment property, I would again go to a CU and just see what the options are.  Compare the rates and "cost" of the money of course and just go from there.  As far as if you can get a cash out on an investment loan, I've done it so it's possible. 

@Kevin Dee There are lenders out there who will do HELOCs and cash-out refis on rentals.  (They don't like us posting names of lenders on here or I would, but I've done both with local portfolio lenders as well as larger national banks.)   Just keep calling around until you find them.  Good luck!

Kevin Dee When ever i get line of credit on house it shows up as revolving line of credit on my credit report. Looks like a tapped out credit card. Something to think about and discuss with you lender.... Frank

Thats's true. Let's say I have a HELOC on my home for 500k, Then I try to get another for 450K on my investment property. Will they even offer it to me? These properties would be free and clear. Should I be looking at "Cash Out" where there is no personal income verification?

Kevin

@Frank R. Yes, that's a common problem with HELOCs, but your bank might be willing to change how they report if you ask. Would be worth a call to see if they're willing to report it as a mortgage. 

For those that aren't familiar with this issue, here's a brief explanation: When accounts report as "revolving" on a credit report, your credit scores can get dinged pretty hard if your amount owed is pretty close to the limit. The most common accounts to be reported as revolving are credit cards, and if you have them maxed out, your credit scores can suffer pretty badly even if your credit is otherwise good. Occasionally, HELOC lenders will report their HELOCs as revolving (since they work that way) instead of as a mortgage, so if you owe a lot on the HELOC, it can make your credit scores suffer.

Originally posted by @Kevin Dee :

 Should I be looking at "Cash Out" where there is no personal income verification?

Kevin

 If you're referring to a conventional cash-out refi, there will be income verification.

Hey Mark, 

So let's say that I have a 500k HELOC open and I haven't used any of it. I don't think my credit should go downhill. I hope!

Kevin

Originally posted by @Mark F. :

@Frank R. Yes, that's a common problem with HELOCs, but your bank might be willing to change how they report if you ask. Would be worth a call to see if they're willing to report it as a mortgage. 

For those that aren't familiar with this issue, here's a brief explanation: When accounts report as "revolving" on a credit report, your credit scores can get dinged pretty hard if your amount owed is pretty close to the limit. The most common accounts to be reported as revolving are credit cards, and if you have them maxed out, your credit scores can suffer pretty badly even if your credit is otherwise good. Occasionally, HELOC lenders will report their HELOCs as revolving (since they work that way) instead of as a mortgage, so if you owe a lot on the HELOC, it can make your credit scores suffer.

Originally posted by @Kevin Dee :

Hello All!!! In New York, I went to my Chase banker and they said it's impossible for them to give me a home equity line of credit on my free and clear condo investment apartment that I rent out. I guess this is true with their bank, but has anyone done this with another bank? Thanks!

Different financial institutions are likely to have a lending criteria that vary.

@Kevin Dee

Hi Kevin, if it's not reporting as a revolving account, which is usually the case, it doesn't matter how much you owe, it won't have any impact on your scores. It's only when it's reporting as revolving and you're maxed out (or very nearly so) that it can impact your credit scores. 

Mark is right.  The revolving line of credit kills your credit score.  Say you have a 100K line and owe 90K, the person that is pulling your credit doesn't see the asset/income supporting the debt.  Most people in general aren't wired to even understand business.


Frank

Regarding the Cash Out idea, I was speaking with and agent at B2R Finance owned by Blackstone and they say... They are a commercial lender with fixed rates at 5%-7.5%. They would require that your assets in income property be all in the same LLC. I don't love the rate but I guess it's an option. The terms are 5 or 10 year on a 30 year schedule. Also saying that they seem to be aimed towards long term buy and hold